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The President of Congress Stated That, Before Putting the Veto to Vote, He Intends to Consult Minister Fernando Haddad, Who Committed to Implement Actions to Mitigate the Impacts of the Proposed Measure. His Intention Is to Ensure a More Informed and Responsible Decision-Making Process.
Implemented as a provisional measure in 2011, this exoneration strategy has been renewed since then. With the President’s decision to veto the extension, the policy will cease to be effective starting in December of this year.
The 17 sectors covered by the exoneration of payroll include apparel and clothing, footwear, construction, call centers, communication, construction companies and infrastructure works, leather, manufacturing of vehicles and bodies, machinery and equipment, animal protein, textiles, information technology (IT), communication technology (CT), integrated circuit design, passenger suburban train transport, collective road transport, and freight road transport.
According to the secretary, the measures that grant tax advantages to different sectors of the economy have decreased government revenue by about 1.5% of the Gross Domestic Product (sum of goods and services produced in the country) over the past few years.
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Understand
Approved by Congress in October, the project extends until 2027 the contribution to Social Security from sectors that employ heavy labor, varying between 1% and 4.5% of gross revenue. Until 2011, these sectors contributed 20% of the payroll to Social Security.
Minister Criticizes Impact of Exonerations on the Brazilian Economy
He mentioned the lack of new hires during the exoneration, and also its ineffectiveness. According to the minister, the tax benefit policy implemented a decade ago has not brought advantages to the Brazilian economy.
He emphasized that the legislator included a clause in the Social Security reform that prohibits new tax benefits for companies, aiming to combat the pension deficit.
Agência Brasil sought the government leaders in the Chamber and in the Senate to comment on the strategy to avoid the overturning of the veto, but did not receive a response by the time of publication.
Government’s Argument
In vetoing the exoneration, the government justified that the proposal is unconstitutional as it reduces the revenue of Social Security without presenting the financial impact on the budget and does not indicate the compensation for these losses. This Friday, Finance Minister Fernando Haddad declared that he does not believe that the end of incentives will result in a wave of layoffs.
Great Majority
Due to the fact that the project was approved by a large majority in the Chamber and in the Senate, there is an expectation that this veto will be overturned, as some lawmakers have already signaled. The leader of the coalition that includes the PP and Republicans parties in the Senate, Ciro Nogueira (PP-PI), expressed discontent with the veto. “This regrettable veto will certainly be overturned by Congress and very quickly,” he stated.
The President of Congress, Pacheco, expressed the legislative support for the exoneration of the payroll as something positive for the country. When asked if the discussion of this veto could delay other important votes for the government, Pacheco assured that the projects related to the taxation of exclusive funds for super-rich, offshore funds, and online gambling would not experience delays. He stated, “We will continue the processing of the projects that support the fiscal regime.”
Bill Extends Contribution Reductions for Social Security
The bill extends the period of reduction of contributions to Social Security for 17 sectors of the economy and for small municipalities until the year 2027. The exoneration was implemented in 2011 and is slated to end this year.
Pacheco stated that, before putting the veto to a vote, he will analyze the suggestions of Finance Minister Fernando Haddad, who committed to taking other measures to minimize the impacts of the end of the exoneration for companies. Additionally, the President of the Senate emphasized that the last veto on the exoneration of the payroll, carried out in the previous government, was revoked by Congress.
**This exoneration has been in place since 2011 and ends this year.**
When discussing the total rejection of the project that would expand the exoneration of the payroll for 17 sectors of the economy and small municipalities, the Senator Rodrigo Pacheco, President of the National Congress (PSD-MG), expressed his support for the exoneration and committed to reviewing the veto of the president this year. In contrast, Pacheco assured that the economic agenda of the government will not be harmed by the veto.
He emphasized the importance of the decision regarding the exoneration, indicating that lack of extension could result in considerable instability and legal insecurity for the sector companies, which in turn would lead to significant layoffs.
Source: InfoMoney
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